This month, the Leon County Clerk of Courts Office will educate the public on a new way to bid on foreclosures. Before this takes place, I want to share with you the current process.
What is a foreclosure?
In short, a foreclosure on a property occurs when a mortgagor (owner who took out a home loan) defaults on payments. The creditor (bank or money lender) takes legal action to force the owner to pay or permanently vacate the premises. This legal action can only be initiated through the court system.
Often times, individuals refer to a Bank Owned (REO) or Short Sale property as a Foreclosure. Technically, a (REO) can be a foreclosure(d) home that has gone through court proceedings without a successful bidder. At that time, ownership of the property is conveyed to the Bank whom has the option to market the home to the public.
During a Short Sale, the mortgagor still has ownership of the property with the guidance of the Lender to market the home at a lower price than the owner paid for it. This is not considered a “foreclosure.”
When/Where do you buy a foreclosure?
Foreclosure Sales occur almost every day at the Leon County Courthouse, 301 S. Monroe Street at 11 a.m. Monday-Friday. The sales/bidding take place in the cashier’s lobby of the Clerk’s Office. It is a good idea to arrive early just in case the sale has been relocated to another area in the Courthouse.
What to do before bidding on a foreclosure?
1- Do your research either online or in person at the Courthouse on the upcoming properties for sale. All foreclosure legal documentations are public record. You have to dig through the file to understand what the property address is and the full amount the bank is seeking
2- Conduct a market analysis on the property that you are interested in.
3- Research the liens that carry over with the property sale.
4- Daily track the property that you are interested in. Sales can be postponed/canceled moments before the 11 o’ clock hour.
5- Secure Liquid Funds (payments must be in the form of cashier’s check, money order, bank check, or cash)
Day of the Sale
Arrive early with 5% of your final bid. (Example: if you want your maximum bid on the property to be $100,000 you must have $5,000 in the form of payment mentioned above)
Prepare for any Auction style Format. The process moves very fast! Listen carefully for the Case Number# (2013 CA 000548) and the Plaintiff and Defendant names. All foreclosure cases have the letters “CA” in the number. The deputy clerk who conducts the auction will not call out the physical address.
You can bid in any dollar increments ($50, $100, $1000) at a time. You can even bid a single dollar at a time but you will probably upset some seasoned bidders. At that point, the bank representative will probably place a bid on behalf of the Lender for full amount owed or close to it. You may ask the question, “Why is a bank representative bidding on its own property.” Simple answer, “They have to.” The lender or a representative must be present and active in order for the legal proceeding to take place. If they are not physically present, the sale will not take place on that date.
If no one bids on the property or bids higher than the Plaintiff the Lender becomes the successful bidder. It is said “The property went back to the Bank.”
If you are the SUCCESSFUL bidder, you have to submit 5% of your bid amount immediately to the Clerk. After completing a short amount of paperwork, you are now ready to submit the remaining bid amount, plus documentary stamps ($.70 per $100) and court registry fees (3% on the first $500 and 1.5% on the balance). This remaining amount must be in receipt of the Court by 4:30 p.m. EST the same day or you forfeit your 5% down- no questions asked.
There is a 10-day waiting “cooling off” period after each Sale. An Objection to the Sale may be filled even if you are the successful bidder. A motion can be filed with the court to stop the insurance of the title. If a judge accepts the motion, the Sale will be vacated and your monies will be returned to you. At that time you have options. You can hire an attorney to attempt to reinstate the final judgment (I would not recommend this option). After several months, you may be out additional funds for hiring a legal team and you still not end up with the property. I recommend that you keep track of the case and wait for the final outcome. The property may come back up for sale in the future.
My #1 recommendation is to use those funds to bid on another foreclosure that you may be interested in.
Click Here for the Leon County Foreclosure Brochure